EXHIBIT 1.1
EXECUTION COPY
5,126,086 SHARES
ACCESS INTEGRATED TECHNOLOGIES, INC.
CLASS A COMMON STOCK
PURCHASE AGREEMENT
March 13, 2006
XXXX CAPITAL PARTNERS LLC
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
XXXXX-XXXXXX CAPITAL GROUP LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Access Integrated Technologies, Inc., a Delaware corporation (the
"COMPANY") proposes, subject to the terms and conditions stated in this Purchase
Agreement (the "AGREEMENT"), to issue and sell to Xxxx Capital Partners LLC and
to Xxxxx-Xxxxxx Capital Group LLC (the "UNDERWRITERS") an aggregate of 5,126,086
authorized but unissued shares (the "SECURITIES") of Class A Common Stock, $.001
par value per share (the "COMMON STOCK"), of the Company.
The Company and the Underwriters hereby confirm their agreement with
respect to the purchase and sale of the Securities as follows:
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (File No. 333-130553) under the Securities
Act of 1933, as amended (the "Securities Act") and the rules and regulations
(the "Rules and Regulations") of the Commission thereunder, and such amendments
to such registration statement as may have been required to the date of this
Agreement. Such registration statement has been declared effective by the
Commission. Such registration statement, at any given time, including amendments
thereto to such time, the exhibits and any schedules thereto at such time, the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act at such time and the documents and information
otherwise deemed to be a part thereof or included therein by Rule 430B under the
Securities Act or otherwise pursuant to the Rules and Regulations at such time,
is herein called the "Registration Statement." The Registration Statement at the
time it originally became effective is herein called the "Original Registration
Statement."
The Company proposes to file with the Commission pursuant to Rule 424
under the Securities Act a final prospectus supplement relating to the
Securities to a form of prospectus included in the Registration Statement
relating to the Securities in the form heretofore delivered to the Underwriter.
Such prospectus in the form in which it appears in the Registration Statement is
hereinafter called the "BASE PROSPECTUS." Such supplemental form of prospectus,
in the form in which it shall be filed with the Commission pursuant to Rule
424(b)(including the Base Prospectus as so supplemented) is hereinafter called
the "PROSPECTUS." Any reference herein to the Base Prospectus or the Prospectus
shall be deemed to include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act as of the date of such
prospectus.
For purposes of this Agreement, all references to the Registration
Statement, the Base Prospectus, the Prospectus or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX"). All references in this Agreement to amendments or supplements
to the Registration Statement, the Base Prospectus or the Prospectus shall be
deemed to mean and include the subsequent filing of any document under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") which is deemed
to be incorporated therein by reference therein or otherwise deemed by the Rules
and Regulations to be a part thereof.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to, and agrees with, the
Underwriters as follows:
(i) No order preventing or suspending the use of any
Prospectus has been issued by the Commission and each Prospectus, at
the time of filing or the time of first use within the meaning of the
Rules and Regulations, complied in all material respects with the
requirements of the Securities Act and the Rules and Regulations and
did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; except that the foregoing shall
not apply to statements in or omissions from any Prospectus in
reliance upon, and in conformity with, written information furnished
to the Company by the Underwriters specifically for use in the
preparation thereof.
(ii) The Company has complied to the Commission's
satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness
of the Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best knowledge
of the Company, are contemplated or threatened by the Commission.
(iii) Each part of the Registration Statement and any
post-effective amendment thereto, at the time such part became
effective (including each deemed effective date with respect to the
Underwriter pursuant to Rule 430B under the Securities Act), at all
other subsequent times until the expiration of the Prospectus Delivery
Period (as defined below), and at the Closing Date (as hereinafter
defined), and the Prospectus (or any amendment or supplement to the
Prospectus), at the time of filing or the time of first use within the
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meaning of the Rules and Regulations, at all subsequent times until
expiration of the Prospectus Delivery Period, and at the Closing Date
complied and will comply in all material respects with the applicable
requirements and provisions of the Securities Act, the Rules and
Regulations and the Exchange Act and did not and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, as amended or supplemented, as
of its date, or the time of first use within the meaning of the Rules
and Regulations, at all subsequent times until the expiration of the
Prospectus Delivery Period, and at the Closing Date, did not and will
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or
omissions from the Registration Statement or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with written
information relating to the Underwriters furnished to the Company by
the Underwriters, specifically for use in the preparation thereof.
(iv) Neither (A) the Issuer General Free Writing
Prospectus(es) issued at or prior to the Time of Sale and the
Statutory Prospectus (collectively, the "Time of Sale Disclosure
Package"), nor (B) any individual Issuer Limited-Use Free Writing
Prospectus, when considered together with the Time of Sale Disclosure
Package, includes or included as of the Time of Sale any untrue
statement of a material fact or omits or omitted as of the Time of
Sale to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The preceding sentence does not apply to
statements in or omissions from any Statutory Prospectus included in
the Registration Statement or any Issuer Free Writing Prospectus based
upon and in conformity with written information furnished to the
Company by the Underwriters specifically for use therein. As used in
this paragraph and elsewhere in this Agreement:
(1) "TIME OF SALE" means 7:00 pm (Eastern time) on
the date of this Agreement.
(2) "STATUTORY PROSPECTUS" as of any time means
the Prospectus that is included in the Registration
Statement immediately prior to that time. For purposes of
this definition, information contained in a form of
prospectus that is deemed retroactively to be a part of the
Registration Statement pursuant to Rule 430B under the
Securities Act shall be considered to be included in the
Statutory Prospectus as of the actual time that form of
prospectus is filed with the Commission pursuant to Rule
424(b) under the Securities Act.
(3) "ISSUER FREE WRITING PROSPECTUS" means any
"issuer free writing prospectus," as defined in Rule 433
under the Securities Act, relating to the Securities that
(A) is required to be filed with the Commission by the
Company, or (B) is exempt from filing pursuant to Rule 433
under the Securities Act because it contains a description
of the Securities or of the offering that does not reflect
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the final terms, in each case in the form filed or required
to be filed with the Commission or, if not required to be
filed, in the form retained in the Company's records
pursuant to Rule 433(g) under the Securities Act.
(4) "ISSUER GENERAL FREE WRITING PROSPECTUS" means
any Issuer Free Writing Prospectus that is intended for
general distribution to prospective investors, as evidenced
by its being specified in Schedule I to this Agreement.
(5) "ISSUER LIMITED-USE FREE WRITING PROSPECTUS"
means any Issuer Free Writing Prospectus that is not an
Issuer General Free Writing Prospectus.
(v) (A) Each Issuer Free Writing Prospectus, as of its issue
date and at all subsequent times through the Prospectus Delivery
Period or until any earlier date that the Company notified or notifies
the Underwriters as described in Section 4(a)(iii)(B), did not, does
not and will not include any information that conflicted, conflicts or
will conflict with the information contained in the Registration
Statement, any Statutory Prospectus or the Prospectus. The foregoing
sentence does not apply to statements in or omissions from any Issuer
Free Writing Prospectus based upon and in conformity with written
information furnished to the Company by the Underwriters specifically
for use therein.
(B) (1) At the earliest time after the filing of the
Registration Statement that the Company or another offering
participant made a BONA FIDE offer (within the meaning of Rule
164(h)(2) under the Securities Act) of the Securities and (2) at the
date hereof, the Company was not and is not an "ineligible issuer," as
defined in Rule 405 under the Securities Act, including the Company or
any subsidiary in the preceding three years not having been convicted
of a felony or misdemeanor or having been made the subject of a
judicial or administrative decree or order as described in Rule 405
(without taking account of any determination by the Commission
pursuant to Rule 405 that it is not necessary that the Company be
considered an ineligible issuer), nor an "excluded issuer" as defined
in Rule 164 under the Securities Act.
(C) Each Issuer Free Writing Prospectus satisfied, as of its
issue date and at all subsequent times through the Prospectus Delivery
Period, all other conditions to use thereof as set forth in Rules 164
and 433 under the Securities Act.
(vi) The financial statements of the Company, together with
the related notes, included or incorporated by reference in the
Registration Statement and the Prospectus comply in all material
respects with the requirements of the Securities Act and the Exchange
Act and fairly present the financial condition of the Company as of
the dates indicated and the results of operations and changes in cash
flows for the periods therein specified in conformity with generally
accepted accounting principles consistently applied throughout the
periods involved; and the supporting schedules included in the
Registration Statement present fairly the information required to be
stated therein. No other financial statements or schedules are
required to be included in the Registration Statement or the
Prospectus. To the Company's knowledge, each of PricewaterhouseCoopers
LLP and Xxxxxx LLP, each of which has expressed its opinion with
respect to the financial statements and schedules filed as a part of
the Registration Statement and included in the Registration Statement
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and the Prospectus, is an independent public accounting firm within
the meaning of the Securities Act and the Rules and Regulations and
such accountants are not in violation of the auditor independence
requirements of the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx
Act").
(vii) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation. Each of the
Company and its subsidiaries has the corporate power and authority to
own its properties and conduct its business as currently being carried
on and as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and, except as set forth on
Schedule III, is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes
such qualification necessary and in which the failure to so qualify
would have a material adverse effect upon the business, prospects,
properties, operations, condition (financial or otherwise) or results
of operations of the Company and its subsidiaries, taken as a whole,
or in its ability to perform its obligations under this Agreement
("Material Adverse Effect").
(viii) Except as contemplated in the Time of Sale Disclosure
Package and in the Prospectus, subsequent to the respective dates as
of which information is given in the Time of Sale Disclosure Package,
neither the Company nor any of its subsidiaries has incurred any
material liabilities or obligations, direct or contingent, or entered
into any material transactions, or declared or paid any dividends or
made any distribution of any kind with respect to its capital stock;
and there has not been any change in the capital stock (other than a
change in the number of outstanding shares of Common Stock due to the
issuance of shares upon the exercise of outstanding options or
warrants), or any material change in the short-term or long-term debt,
or any issuance of options, warrants, convertible securities or other
rights to purchase the capital stock, of the Company or any of its
subsidiaries, or any material adverse change in the financial
condition, business, prospects, property, operations or results of
operations of the Company and its subsidiaries, taken as a whole
("Material Adverse Change").
(ix) Except as set forth in the Time of Sale Disclosure
Package and the Prospectus, there is not pending or, to the knowledge
of the Company, threatened or contemplated, any action, suit or
proceeding to which the Company or any of its subsidiaries is a party
or of which any property or assets of the Company is the subject
before or by any court or governmental agency, authority or body, or
any arbitrator, which, individually or in the aggregate, might result
in any Material Adverse Change.
(x) This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms,
except as rights to indemnity hereunder may be limited by federal or
state securities laws and except as such enforceability may be limited
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by bankruptcy, insolvency, reorganization or similar laws affecting
the rights of creditors generally and subject to general principles of
equity. The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any agreement or
instrument to which the Company is a party or by which it is bound or
to which any of its property is subject, or any order, rule,
regulation or decree of any court or governmental agency or body
having jurisdiction over the Company or any of its properties except
for violations and defaults which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, the Company's charter or by-laws. No
consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or for the consummation of
the transactions contemplated hereby, including the issuance or sale
of the Securities by the Company, except such as may be required under
the Securities Act or state securities or blue sky laws; and the
Company has the power and authority to enter into this Agreement and
to authorize, issue and sell the Securities as contemplated by this
Agreement.
(xi) All of the issued and outstanding shares of capital
stock of the Company, including the outstanding shares of Common
Stock, are duly authorized and validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase
securities that have not been waived in writing (a copy of which has
been delivered to counsel to the Underwriter); the Securities which
may be sold hereunder by the Company have been duly authorized and,
when issued, delivered and paid for in accordance with the terms of
this Agreement, will have been validly issued and will be fully paid
and nonassessable; and the capital stock of the Company, including the
Common Stock, conforms to the description thereof in the Registration
Statement, in the Time of Sale Disclosure Package and in the
Prospectus. Except as otherwise stated in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus, there
are no preemptive rights or other rights to subscribe for or to
purchase, or any restriction upon the voting or transfer of, any
shares of Common Stock pursuant to the Company's charter, by-laws or
any agreement or other instrument to which the Company is a party or
by which the Company is bound. Neither the filing of the Registration
Statement nor the offering or sale of the Securities as contemplated
by this Agreement gives rise to any rights for or relating to the
registration of any shares of Common Stock or other securities of the
Company that have not been waived. All of the issued and outstanding
shares of capital stock of each of the Company's subsidiaries have
been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise described in the Registration
Statement, in the Time of Sale Disclosure Package and in the
Prospectus and except for any directors' qualifying shares, the
Company owns of record and beneficially, free and clear of any
security interests, claims, liens, proxies, equities or other
encumbrances, all of the issued and outstanding shares of such stock.
Except as described in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus, there are no options,
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warrants, agreements, contracts or other rights in existence to
purchase or acquire from the Company or any subsidiary of the Company
any shares of the capital stock of the Company or any subsidiary of
the Company. The Company has an authorized and outstanding
capitalization as set forth in the Registration Statement, in the Time
of Sale Disclosure Package and in the Prospectus.
(xii) The Company and each of its subsidiaries holds, and is
operating in compliance in all material respects with, all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders of any governmental or self-regulatory body
required for the conduct of its business and all such franchises,
grants, authorizations, licenses, permits, easements, consents,
certifications and orders are valid and in full force and effect in
all material respects; and the Company and each of its subsidiaries is
in compliance in all material respects with all applicable federal,
state, local and foreign laws, regulations, orders and decrees.
(xiii) The Company and its subsidiaries have good and
marketable title to all property (whether real or personal) described
in the Registration Statement, in the Time of Sale Disclosure Package
and in the Prospectus as being owned by them which are material to the
business of the Company, in each case free and clear of all liens,
claims, security interests, other encumbrances or defects except such
as are described in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus. The property held under
lease by the Company and its subsidiaries is held by them under valid,
subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material
respect with the conduct of the business of the Company or its
subsidiaries.
(xiv) The Company and each of its subsidiaries owns or
possesses all patents, patent applications, trademarks, service marks,
tradenames, trademark registrations, service xxxx registrations,
copyrights, licenses, inventions, trade secrets and rights necessary
for the conduct of the business of the Company and its subsidiaries as
currently carried on and as described in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus; except
as stated in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus, to the knowledge of the
Company, no name which the Company or any of its subsidiaries uses and
no other aspect of the business of the Company or any of its
subsidiaries will involve or give rise to any infringement of, or
license or similar fees for, any patents, patent applications,
trademarks, service marks, tradenames, trademark registrations,
service xxxx registrations, copyrights, licenses, inventions, trade
secrets or other similar rights of others material to the business or
prospects of the Company and neither the Company nor any of its
subsidiaries has received any notice alleging any such infringement or
fee.
(xv) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in breach of or
otherwise in default, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the
performance of any material obligation, agreement or condition
contained in any bond, debenture, note, indenture, loan agreement or
any other material contract, lease or other instrument to which it is
subject or by which any of them may be bound, or to which any of the
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material property or assets of the Company or any of its subsidiaries
is subject.
(xvi) The Company and its subsidiaries have timely filed all
federal, state and local income tax returns required to be filed and
are not in default in the payment of any taxes which were payable
pursuant to said returns or any assessments with respect thereto,
other than any which the Company or any of its subsidiaries is
contesting in good faith.
(xvii) The Company has not distributed and will not
distribute any prospectus or other offering material in connection
with the offering and sale of the Securities other than the Time of
Sale Disclosure Package or the Prospectus or other materials permitted
by the Securities Act to be distributed by the Company; provided,
however, that, except as set forth on Schedule I, the Company has not
made and will not make any offer relating to the Securities that would
constitute a "free writing prospectus" as defined in Rule 405 under
the Securities Act, except in accordance with the provisions of
Section 4(a)(xiv) of this Agreement.
(xviii) The Common Stock is registered pursuant to Section
12(b) of the Exchange Act and is included or approved for inclusion on
the American Stock Exchange and the Company has taken no action
designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting
the Common Stock from the American Stock Exchange (although the
Company may choose to list its securities on the NYSE or Nasdaq Stock
Market) nor has the Company received any notification that the
Commission or the American Stock Exchange is contemplating terminating
such registration or listing. The Company has complied in all material
respects with the applicable requirements of the American Stock
Exchange for maintenance of inclusion of the Common Stock thereon. The
Company has filed an application to include the Securities on the
American Stock Exchange.
(xix) Other than the subsidiaries of the Company listed on
SCHEDULE III hereto, the Company, directly or indirectly, owns no
capital stock or other equity or ownership or proprietary interest in
any corporation, partnership, association, trust or other entity.
(xx) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and
(D) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Registration
Statement, in the Time of Sale Disclosure Package and in the
Prospectus, since December 31, 2005, there has been no change in the
Company's internal control over financial reporting that has
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materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
(xxi) Other than as contemplated by this Agreement, the
Company has not incurred any liability for any finder's or broker's
fee or agent's commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(xxii) The Company carries, or is covered by, insurance in
such amounts and covering such risks as is adequate for the conduct of
its business and the value of its properties and as is customary for
companies engaged in similar businesses in similar industries.
(xxiii) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company," as such term is defined in the Investment Company Act of
1940, as amended.
(xxiv) The conditions for use of Form S-3, set forth in the
General Instructions thereto, have been satisfied. The Company also
complies with the standards for using Form S-3 as in place prior to
October 21, 1992, namely, as of a date within 30 days prior to the
date of this Agreement, the aggregate market value of the voting and
non-voting common equity of the Company held by non-affiliates of the
Company exceeded $100,000,000 (as calculated by reference to the
closing prior of the Common Stock on the American Stock Exchange) and
non-affiliates of the Company held more than 3,000,000 shares of the
Common Stock on such date.
(xxv) The documents incorporated by reference in the Time of
Sale Disclosure Package, the Registration Statement and in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Securities Act or the Exchange Act, as
applicable, and were filed on a timely basis with the Commission and
none of such documents contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; any further documents so filed and
incorporated by reference in the Time of Sale Disclosure Package, the
Registration Statement or in the Prospectus, when such documents are
filed with the Commission, will conform in all material respects to
the requirements of the Exchange Act, and will not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(xxvi) The Company is in substantial compliance with all
applicable provisions of the Xxxxxxxx-Xxxxx Act and the rules and
regulations of the Commission thereunder that are effective with
respect to the Company and its subsidiaries on the date of this
Agreement, except where such noncompliance would not have,
individually or in the aggregate, a Material Adverse Effect.
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(xxvii) The Company has established and maintains disclosure
controls and procedures (as defined in Rules 13a-14 and 15d-14 under
the Exchange Act) and such controls and procedures are effective in
ensuring that material information relating to the Company, including
its subsidiaries, is made known to the principal executive officer and
the principal financial officer. The Company has utilized such
controls and procedures in preparing and evaluating the disclosures in
the Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus.
(b) Any certificate signed by any officer of the Company and delivered
to the Underwriters or to the Underwriters' Counsel shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
3. PURCHASE, SALE AND DELIVERY OF SECURITIES.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell the Securities to the respective Underwriters,
and, respectively, the Underwriters agree severally and not jointly to purchase
from the Company the Securities as set forth opposite the name of such
Underwriter below on the signature page hereof. The purchase price for each
share of the Securities shall be $9.40 per share. The price per share is equal
to the public offering price of the Securities less a discount equal to five
percent (5%) of the public offering price per Security and an advisory fee equal
to one percent (1%) of the public offering price per Security.
In addition, the Company hereby grants to the several Underwriters the
option to purchase from the Company an aggregate of up to an additional 768,913
shares of common stock (the "ADDITIONAL SHARES"), ratably in accordance with the
number of Securities to be purchased by each of the Underwriters (subject to
such adjustment as the Company shall determine to avoid fractional shares), as
may be necessary solely for the purpose of covering over-allotments made in
connection with the offering of the Securities, at the same purchase price per
share to be paid by the Underwriters to the Company for the Securities. This
option may be exercised by the Underwriters at any time (but not more than once)
on or before the thirtieth day following the date hereof, by written notice to
the Company. Such notice shall set forth the aggregate number of Additional
Shares as to which the option is being exercised, and the date and time when the
Additional Shares are to be delivered (such date and time being herein referred
to as the "OPTION CLOSING Date"); PROVIDED, HOWEVER, that the Option Closing
Date shall not be earlier than the Closing Date (as defined below) nor earlier
than the second business day after the date on which the option shall have been
exercised nor later than the fifth business day after the date on which the
option shall have been exercised unless the Company and the Underwriters
otherwise agree. The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same proportion to the aggregate number of
Additional Shares being purchased as the number of Securities set forth opposite
the name of such Underwriter on signature page hereto bears to the total number
of Securities being purchased by the respective Underwriter (subject, in each
case, to such adjustment as you may determine to eliminate fractional shares).
Payment of the purchase price and delivery for the Additional Shares
shall be made at the Option Closing Date in the same manner and at the same
office as the payment for the Securities as set forth in subparagraph (b) below.
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(b) The Securities will be delivered by the Company to the
Underwriters for the Underwriters' account against payment of the purchase price
therefor by wire transfer of same day funds payable to the order of the Company,
as appropriate, at the offices of Xxxx Capital Partners LLC, 00 Xxxxxxxxx Xxxxx,
Xxxxxxx Xxxxx, XX 00000, or such other location as may be mutually acceptable,
at 9:00 a.m. PST, on the third (or if the Securities are priced, as contemplated
by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m. Eastern time, the
fourth) full business day following the date hereof, or at such other time and
date as the Underwriters and the Company determine pursuant to Rule 15c6-1(a)
under the Exchange Act, such time and date of delivery being herein referred to
as the "Closing Date." If the Underwriters so elect, delivery of the Securities
may be made by credit through full fast transfer to the account at The
Depository Trust Company designated by the Underwriters. Certificates
representing the Securities, in definitive form and in such denominations and
registered in such names as the Underwriters may request upon at least two
business days' prior notice to the Company, will be made available for checking
and packaging not later than 10:30 a.m., PST or Central time, as applicable, on
the business day next preceding the Closing Date at the above addresses, or such
other location as may be mutually acceptable.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE UNDERWRITERS. Each
Underwriter hereby represents and warrants to the Company as follows:
(a) Each Underwriter is a member in good standing of the NASD and is
subject to no statutory disqualification provisions including, but not limited
to, those contained in NASD Regulation Section 230.262.
(b) Each Underwriter is a duly registered broker-dealer under the
Exchange Act and the rules and regulations promulgated thereunder and is in good
standing as a registered broker-dealer.
(c) Neither Underwriter will use any written sales material other than
the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus and publicly available information and neither Underwriter will
represent to any person acquiring Securities in the offering any non-public
material facts relating to the offering of the Securities, the Securities, the
Company or the business of the Company, including its future prospects, except
as expressly permitted herein.
(d) Assuming the accuracy of the Company's representations and
warranties contained herein, neither Underwriter is required to make a filing
with the NASD pursuant to Rule 2710 to enable it to act as underwriter in the
offering of the Securities.
(e) Each Underwriter is a limited liability company duly organized,
validly existing and in good standing under the laws of the respective
jurisdictions of organization of each Underwriter and has all company power and
authority to execute this Agreement and complete the transactions contemplated
hereby.
(f) The execution, delivery, and performance of this Agreement has
been duly authorized by all requisite company action on behalf of each
Underwriter, and this Agreement has been duly executed and delivered and
constitutes the valid and binding obligation of each Underwriter enforceable in
11
accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights, to general principles of equity and
to the extent that rights to indemnify thereunder may be limited under
applicable laws.
(g) Assuming the accuracy of the Company's representations and
warranties contained herein, the execution and delivery by each Underwriter of
this Agreement, the performance by each Underwriter of this Agreement and the
completion of the transactions herein contemplated will not conflict with or
result in a breach of the terms of, or constitute a default under or violation
of, any law or regulation of any governmental authority, domestic or foreign, or
the charter or operating agreement of each Underwriter.
(h) There is no pending litigation, regulatory proceeding or order,
disciplinary proceeding or claim of violation against the Company, or to the
best knowledge of each Underwriter, any threatened litigation, regulatory
proceeding or order, disciplinary proceeding or claim of violation against the
Company, that could materially adversely affect the ability of each Underwriter
to carry out its functions as an Underwriter contemplated by this Agreement.
5. COVENANTS.
(a) The Company covenants and agrees with the Underwriters, and the
Underwriters covenant and agree with the Company, as follows:
(i) During the period beginning on the date hereof and
ending on the later of the Closing Date or such date, as in the
opinion of counsel for the Underwriters, the Prospectus is no longer
required by law to be delivered (or in lieu thereof the notice
referred to in Rule 173(a) under the Securities Act is no longer
required to be provided), in connection with sales by an underwriter
or dealer (the "Prospectus Delivery Period"), prior to amending or
supplementing the Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, the Company shall furnish to the
Underwriters for review a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed amendment
or supplement to which the Underwriters reasonably object.
(ii) After the date of this Agreement, the Company shall
promptly advise the Underwriters in writing (i) of the receipt of any
comments of, or requests for additional or supplemental information
from, the Commission, (ii) of the time and date of any filing of any
post-effective amendment to the Registration Statement or any
amendment or supplement to any Prospectus, the Time of Sale Disclosure
Package or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of any order preventing or
suspending its use or the use of any Prospectus, the Time of Sale
Disclosure Package or any Issuer Free Writing Prospectus, or of any
proceedings to remove, suspend or terminate from listing or quotation
the Common Stock from any securities exchange upon which it is listed
for trading or included or designated for quotation, or of the
12
threatening or initiation of any proceedings for any of such purposes.
If the Commission shall enter any such stop order at any time, the
Company will use its reasonable efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Company
agrees that it shall comply with the provisions of Rules 424(b), 430A
and 430B, as applicable, under the Securities Act and will use its
reasonable efforts to confirm that any filings made by the Company
under Rule 424(b) or Rule 433 were received in a timely manner by the
Commission (without reliance on Rule 424(b)(8) or Rule 164(b)).
(iii) (A) During the Prospectus Delivery Period, the Company
will comply as far as it is able with all requirements imposed upon it
by the Securities Act, as now and hereafter amended, and by the Rules
and Regulations, as from time to time in force, and by the Exchange
Act so far as necessary to permit the continuance of sales of or
dealings in the Securities as contemplated by the provisions hereof,
the Time of Sale Disclosure Package, and the Registration Statement
and the Prospectus. If during such period any event occurs as a result
of which the Prospectus (or if the Prospectus is not yet available to
prospective purchasers, the Time of Sale Disclosure Package ) would
include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances then existing, not misleading, or if during such
period it is necessary or appropriate in the opinion of the Company or
its counsel or the Underwriters or counsel to the Underwriters to
amend the Registration Statement or supplement the Prospectus (or if
the Prospectus is not yet available to prospective purchasers, the
Time of Sale Disclosure Package ) to comply with the Securities Act or
to file under the Exchange Act any document which would be deemed to
be incorporated by reference in the Prospectus in order to comply with
the Securities Act or the Exchange Act, the Company will promptly
notify the Underwriters and will amend the Registration Statement or
supplement the Prospectus (or if the Prospectus is not yet available
to prospective purchasers, the Time of Sale Disclosure Package) or
file such document (at the expense of the Company) so as to correct
such statement or omission or effect such compliance.
(B) If at any time following issuance of an Issuer Free
Writing Prospectus there occurred or occurs an event or development as
a result of which such Issuer Free Writing Prospectus conflicted or
would conflict with the information contained in the Registration
Statement, the Statutory Prospectus or the Prospectus or included or
would include an untrue statement of a material fact or omitted or
would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at
that subsequent time, not misleading, the Company has promptly
notified or promptly will notify the Underwriter and has promptly
amended or will promptly amend or supplement, at its own expense, such
Issuer Free Writing Prospectus to eliminate or correct such conflict,
untrue statement or omission.
(iv) The Company shall take or cause to be taken all
necessary action to qualify the Securities for sale under the
securities laws of such jurisdictions as the Underwriters reasonably
designate and to continue such qualifications in effect so long as
required for the distribution of the Securities, except that the
Company shall not be required in connection therewith to qualify as a
foreign corporation or to execute a general consent to service of
process in any state.
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(v) The Company will furnish to the Underwriters and counsel
for the Underwriters copies of the Registration Statement, the
Prospectus, any Issuer Free Writing Prospectus, and all amendments and
supplements to such documents, in each case as soon as available and
in such quantities as the Underwriter may from time to time reasonably
request.
(vi) The Company will make generally available to its
security holders as soon as practicable, but in any event not later
than 15 months after the end of the Company's current fiscal quarter,
an earnings statement (which need not be audited) covering a 12-month
period that shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Rules and Regulations.
(vii) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is
terminated, will pay or cause to be paid (A) all expenses (including
transfer taxes allocated to the respective transferees) incurred in
connection with the delivery to the Underwriters of the Securities,
(B) all expenses and fees (including, without limitation, fees and
expenses of the Underwriters' counsel) in connection with the
preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein and
all amendments, schedules, and exhibits thereto), the Securities, the
Prospectus, any Issuer Free Writing Prospectus and any amendment
thereof or supplement thereto, and the printing, delivery, and
shipping of this Agreement and other underwriting documents, including
Blue Sky Memoranda (covering the states and other applicable
jurisdictions), (C) all filing fees and fees and disbursements of the
Underwriters' counsel incurred in connection with the qualification of
the Securities for offering and sale by the Underwriters or by dealers
under the securities or blue sky laws of the states and other
jurisdictions which the Underwriters shall designate, (D) the fees and
expenses of any transfer agent or registrar, (E) the filing fees and
fees and disbursements of Underwriters' counsel incident to any
required review and approval by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Securities, (F) listing
fees, if any, and (G) all other costs and expenses incident to the
performance of its obligations hereunder that are not otherwise
specifically provided for herein. If this Agreement is terminated by
the Underwriters pursuant to Section 8 hereof or if the sale of the
Securities provided for herein is not consummated by reason of any
failure, refusal or inability on the part of the Company to perform
any agreement on its part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be
fulfilled by the Company is not fulfilled, the Company will reimburse
the Underwriters for all out-of-pocket disbursements (including but
not limited to fees and disbursements of counsel, printing expenses,
travel expenses, postage, facsimile and telephone charges) incurred by
the Underwriters in connection with their investigation, preparing to
market and marketing the Securities or in contemplation of performing
their obligations hereunder. Notwithstanding anything contained
herein, the maximum amount payable by the Company for Underwriters'
counsel fees, disbursements and expenses pursuant to this Section
4(a)(vii) shall be $50,000.
14
(viii) The Company will apply the net proceeds from the sale
of the Securities to be sold by it hereunder for the purposes set
forth in the Time of Sale Disclosure Package and in the Prospectus.
(ix) The Company has not taken and will not take, directly
or indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities
(x) The Company will not incur any liability for any
finder's or broker's fee or agent's commission in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(xi) During the Prospectus Delivery Period, the Company will
file on a timely basis with the Commission such periodic and special
reports as required by the Rules and Regulations.
(xii) The Company and its subsidiaries will maintain such
controls and other procedures, including without limitation those
applicable to the Company and required by Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act and the applicable regulations thereunder, that are
designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act
is recorded, processed, summarized and reported within the time
periods specified in the Commission's rules and forms, including
without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and
communicated to the Company's management, including its principal
executive officer and its principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure, to ensure that material information
relating to Company, including its subsidiaries, is made known to them
by others within those entities.
(xiii) The Company and its subsidiaries will substantially
comply with all effective applicable provisions of the Xxxxxxxx-Xxxxx
Act.
(xiv) The Company represents and agrees that, unless it
obtains the prior written consent of the Underwriters, and each
Underwriter severally and not jointly represents and agrees that,
unless it obtains the prior written consent of the Company, it has not
made and will not make any offer relating to the Securities that would
constitute an "issuer free writing prospectus," as defined in Rule 433
under the Securities Act, or that would otherwise constitute a "free
writing prospectus," as defined in Rule 405 under the Securities Act,
required to be filed with the Commission; provided that the prior
written consent of the parties hereto shall be deemed to have been
given in respect of the free writing prospectuses included in Schedule
I. Any such free writing prospectus consented to by the Company and
the Underwriters is hereinafter referred to as a "PERMITTED FREE
WRITING PROSPECTUS." The Company represents that it has treated or
agrees that it will treat each Permitted Free Writing Prospectus as an
15
"issuer free writing prospectus," as defined in Rule 433, and has
complied and will comply with the requirements of Rule 433 applicable
to any Permitted Free Writing Prospectus, including timely Commission
filing where required, legending and record keeping.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters hereunder are subject to the accuracy, as of the date hereof and at
the Closing Date (as if made at the Closing Date), of and compliance with all
representations, warranties and agreements of the Company contained herein, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) If filing of the Prospectus, or any amendment or
supplement thereto, or any Issuer Free Writing Prospectus, is required
under the Securities Act or the Rules and Regulations, the Company
shall have filed the Prospectus (or such amendment or supplement) or
such Issuer Free Writing Prospectus with the Commission in the manner
and within the time period so required (without reliance on Rule
424(b)(8) or Rule 164(b)); the Registration Statement shall remain
effective; no stop order suspending the effectiveness of the
Registration Statement or any part thereof, or any amendment thereof,
nor suspending or preventing the use of the Time of Sale Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus shall
have been issued; no proceedings for the issuance of such an order
shall have been initiated or threatened; any request of the Commission
for additional information (to be included in the Registration
Statement, the Time of Sale Disclosure Package, the Prospectus, any
Issuer Free Writing Prospectus or otherwise) shall have been complied
with to the Underwriters' satisfaction; and the NASD shall have raised
no objection to the fairness and reasonableness of the underwriting
terms and arrangements.
(b) The Underwriters shall not have advised the Company that
the Registration Statement, the Time of Sale Disclosure Package or the
Prospectus, or any amendment thereof or supplement thereto, or any
Issuer Free Writing Prospectus, contains an untrue statement of fact
which, in the Underwriters' opinion, is material, or omits to state a
fact which, in the Underwriters' opinion, is material and is required
to be stated therein or necessary to make the statements therein not
misleading.
(c) Except as contemplated in the Time of Sale Disclosure
Package and in the Prospectus, subsequent to the respective dates as
of which information is given in the Time of Sale Disclosure Package,
neither the Company nor any of its subsidiaries shall have incurred
any material liabilities or obligations, direct or contingent, or
entered into any material transactions, or declared or paid any
dividends or made any distribution of any kind with respect to its
capital stock; and there shall not have been any change in the capital
stock (other than a change in the number of outstanding shares of
Common Stock due to the issuance of shares upon the exercise of
outstanding options or warrants), or any material change in the
short-term or long-term debt of the Company, or any issuance of
options, warrants, convertible securities or other rights to purchase
the capital stock of the Company or any of its subsidiaries, or any
Material Adverse Change or any development involving a prospective
Material Adverse Change (whether or not arising in the ordinary course
of business), or any loss by strike, fire, flood, earthquake, accident
or other calamity, whether or not covered by insurance, incurred by
the Company or any subsidiary, the effect of which, in any such case
described above, in the Underwriters' judgment, makes it impractical
or inadvisable to offer or deliver the Securities on the terms and in
16
the manner contemplated in the Time of Sale Disclosure Package, the
Registration Statement and in the Prospectus.
(d) On or after the Time of Sale (i) no downgrading shall
have occurred in the rating accorded any of the Company's securities
by any "nationally recognized statistical organization," as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's securities.
(e) On the Closing Date, there shall have been furnished to
the Underwriters the opinion of Xxxxxx, Xxxx & Xxxxxx LLP, counsel for
the Company, dated the Closing Date and addressed to the Underwriters,
in form and substance reasonably satisfactory to the Underwriters, to
the effect set forth in Schedule II.
In rendering such opinion such counsel may rely (i) as to
matters of law other than New York, Delaware and federal law, upon the
opinion or opinions of local counsel provided that the extent of such
reliance is specified in such opinion and that such counsel shall
state that such opinion or opinions of local counsel are satisfactory
to them and that they believe they and the Underwriters are justified
in relying thereon and (ii) as to matters of fact, to the extent such
counsel deems reasonable upon certificates of officers of the Company
and its subsidiaries provided that the extent of such reliance is
specified in such opinion.
(f) On the Closing Date, the Underwriters shall have
received a letter of Xxxxxx LLP, dated the Closing Date and addressed
to the Underwriters, confirming that they are independent public
accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualifications of accountants under Rule 2-01 of Regulation S-X of the
Commission, and stating, as of the date of such letter (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Time of Sale Disclosure Package, as of a date not prior to the
date hereof or more than five days prior to the date of such letter),
the conclusions and findings of said firm with respect to the
financial information and other matters covered by its letter
delivered to the Underwriters concurrently with the execution of this
Agreement, and the effect of the letter so to be delivered on the
Closing Date shall be to confirm the conclusions and findings set
forth in such prior letter.
(g) On the Closing Date, there shall have been furnished to
the Underwriters a certificate, dated the Closing Date and addressed
to the Underwriters, signed by the chief executive officer or the
chief financial officer of the Company, to the effect that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, in all
material respects, as if made at and as of the Closing Date,
and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) No stop order or other order suspending the
effectiveness of the Registration Statement or any part
thereof or any amendment thereof or the qualification of the
17
Securities for offering or sale nor suspending or preventing
the use of the Time of Sale Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus, has been
issued, and no proceeding for that purpose has been
instituted or, to the best of their knowledge, is
contemplated by the Commission or any state or regulatory
body; and
(iii) The signers of said certificate have
carefully examined the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus, and any
amendments thereof or supplements thereto (including any
documents filed under the Exchange Act and deemed to be
incorporated by reference into the Time of Sale Disclosure
Package, the Registration Statement or the Prospectus), and
(A) each part of the Registration Statement and
the Prospectus, and any amendments thereof or supplements
thereto (including any documents filed under the Exchange
Act and deemed to be incorporated by reference into the
Prospectus) contain, and contained, when such part of the
Registration Statement (or such amendment) became effective,
all statements and information required to be included
therein, each part of the Registration Statement, or any
amendment thereof, does not contain, and did not contain,
when such part of the Registration Statement (or such
amendment) became effective, any untrue statement of a
material fact or omit to state, and did not omit to state
when such part of the Registration Statement (or such
amendment) became effective, any material fact required to
be stated therein or necessary to make the statements
therein not misleading, and the Prospectus, as amended or
supplemented, does not include and did not include as of its
date, or the time of first use within the meaning of the
Rules and Regulations, any untrue statement of a material
fact or omit to state and did not omit to state as of its
date, or the time of first use within the meaning of the
Rules and Regulations, a material fact necessary to make the
statements therein, in light of the circumstances under
which they were made,
(B) neither (1) the Time of Sale Disclosure
Package nor (2) any individual Issuer Limited-Use Free
Writing Prospectus, when considered together with the Time
of Sale Disclosure Package, include, nor included as of the
Time of Sale any untrue statement of a material fact or
omits, or omitted as of the Time of Sale, to state any
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
(C) since the Time of Sale, there has occurred no
event required to be set forth in an amended or supplemented
prospectus which has not been so set forth, and there has
been no document required to be filed under the Exchange Act
that upon such filing would be deemed to be incorporated by
reference into the Time of Sale Disclosure Package, the
Registration Statement or into the Prospectus that has not
been so filed,
(D) subsequent to the respective dates as of which
information is given in the Time of Sale Disclosure Package,
neither the Company nor any of its subsidiaries has incurred
any material liabilities or obligations, direct or
contingent, or entered into any material transactions, not
in the ordinary course of business, or declared or paid any
dividends or made any distribution of any kind with respect
to its capital stock, and except as disclosed in the Time of
Sale Disclosure Package and in the Prospectus, there has not
been any change in the capital stock (other than a change in
the number of outstanding shares of Common Stock due to the
issuance of shares upon the exercise of outstanding options
or warrants), or any material change in the short-term or
long-term debt, or any issuance of options, warrants,
convertible securities or other rights to purchase the
capital stock, of the Company, or any of its subsidiaries,
or any Material Adverse Change or any development involving
a prospective Material Adverse Change (whether or not
arising in the ordinary course of business), or any loss by
strike, fire, flood, earthquake, accident or other calamity,
whether or not covered by insurance, incurred by the Company
or any subsidiary, and
(E) except as stated in the Time of Sale
Disclosure Package and in the Prospectus, there is not
pending, or, to the knowledge of the Company, threatened or
contemplated, any action, suit or proceeding to which the
Company or any of its subsidiaries is a party before or by
any court or governmental agency, authority or body, or any
arbitrator, which might result in any Material Adverse
Change.
(h) The Company shall have furnished to the Underwriters and counsel
for the Underwriters such additional documents, certificates and evidence as the
Underwriters or counsel for the Underwriters may have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to the Underwriters and counsel for the Underwriters. The Company
will furnish the Underwriters with such conformed copies of such opinions,
certificates, letters and other documents as the Underwriters shall reasonably
request.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the Underwriters
against any losses, claims, damages or liabilities to which the Underwriters may
become subject, under the Securities Act or otherwise (including in settlement
of any litigation if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, including the information deemed to be a part of the Registration
Statement at the time of effectiveness and at any subsequent time pursuant to
Rules 430A and 430B of the Rules and Regulations, the Time of Sale Disclosure
Package, the Prospectus, or any amendment or supplement thereto (including any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus), any Issuer Free Writing Prospectus or in any
materials or information provided to investors by, or with the approval of, the
Company in connection with the marketing of the offering of the Common Stock
("MARKETING MATERIALS"), including any roadshow or investor presentations made
to investors by the Company (whether in person or electronically) or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
18
therein not misleading, and will reimburse the Underwriters for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action; or (ii) in
whole or in part upon any inaccuracy in the representations and warranties of
the Company contained herein; or (iii) in whole or in part upon any failure of
the Company to perform its obligations hereunder or under law; PROVIDED,
HOWEVER, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus, the
Time of Sale Disclosure Package, the Prospectus, or any such amendment or
supplement, any Issuer Free Writing Prospectus or in any Marketing Materials, in
reliance upon and in conformity with written information furnished to the
Company by the Underwriters specifically for use in the preparation thereof.
In addition to their other obligations under this Section 6(a), the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
this Section 6(a), it will reimburse the Underwriters on a monthly basis for all
reasonable legal fees or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Underwriters shall promptly return it to the Company, together
with interest, compounded daily, determined on the basis of the prime rate (or
other commercial lending rate for borrowers of the highest credit standing)
announced from time to time by Xxxxx Fargo Bank, N.A. (the "PRIME RATE"). Any
such interim reimbursement payments which are not made to the Underwriters
within 30 days of a request for reimbursement shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement shall be in
addition to any liabilities which the may otherwise have.
(b) Each of the Underwriters will indemnify severally and not jointly
and hold harmless the Company against any losses, claims, damages or liabilities
to which the Company may become subject, under the Securities Act or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Time of Sale Disclosure Package,
the Prospectus, or any amendment or supplement thereto or any Issuer Free
Writing Prospectus, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, the Time of Sale Disclosure Package, the Prospectus, or any amendment
or supplement thereto, or any Issuer Free Writing Prospectus in reliance upon
and in conformity with written information furnished to the Company by the
Underwriter specifically for use in the preparation thereof, and will reimburse
19
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending against any such loss, claim,
damage, liability or action.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party except to the extent such indemnifying
party has been materially prejudiced by such failure. In case any such action
shall be brought against any indemnified party, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that if, in the sole judgment of the Underwriters, it is advisable for the
Underwriters to be represented by separate counsel, the Underwriters shall have
the right to employ a single counsel to represent the Underwriters in any claim
in respect of which indemnity may be sought by the Underwriters under subsection
(a) of this Section 6, in which event the reasonable fees and expenses of such
separate counsel shall be borne by the indemnifying party or parties and
reimbursed to the Underwriters as incurred (in accordance with the provisions of
the second paragraph in subsection (a) above).
The indemnifying party under this Section 6 shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by this Section 6, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement, compromise or consent to the entry
of judgment in any pending or threatened action, suit or proceeding in respect
of which any indemnified party is or could have been a party and indemnity was
or could have been sought hereunder by such indemnified party, unless such
settlement, compromise or consent (a) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding and (b) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
20
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the respective Underwriter on the other from
the offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the respective
Underwriter on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the respective Underwriter on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the respective Underwriter, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the respective Underwriter and the parties' relevant intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The Company and the respective Underwriter agree that it
would not be just and equitable if contributions pursuant to this subsection (d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the first sentence of this subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against any action or claim
which is the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), the respective Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities were offered to the public exceeds the amount of any damages that
the respective Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and the benefits
of such obligations shall extend, upon the same terms and conditions, to each
person, if any, who controls the respective Underwriter within the meaning of
the Securities Act; and the obligations of the respective Underwriter under this
Section 6 shall be in addition to any liability that the respective Underwriter
may otherwise have and the benefits of such obligations shall extend, upon the
same terms and conditions, to each director of the Company (including any person
who, with his consent, is named in the Registration Statement as about to become
a director of the Company), to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Securities Act.
(f) Each Underwriter severally and not jointly confirms and the
Company acknowledges that there is no information concerning the Underwriter
furnished in writing to the Company by the Underwriter specifically for
inclusion in the Registration Statement, the Time of Sale Disclosure Package,
the Prospectus or any Issuer Free Writing Prospectus.
21
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.
(a) All representations, warranties, and agreements of the Company
herein or in certificates delivered pursuant hereto, including but not limited
to the agreements of the Underwriters and the Company contained in Section 6
hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Underwriters or any controlling person
thereof, or the Company or any of its officers, directors, or controlling
persons, and shall survive delivery of, and payment for, the Securities to and
by the Underwriters hereunder.
(b) Notwithstanding anything contained herein to the contrary, the
Company shall not be in breach of any representation, warranty, covenant or
agreement if it enters into a financing commitment with any third party lender.
9. TERMINATION OF THIS AGREEMENT.
(a) The Underwriters shall have the right to terminate this Agreement
by giving notice to the Company as hereinafter specified at any time at or prior
to the Closing Date, if (i) the Company shall have failed, refused or been
unable, at or prior to the Closing Date, to perform any material agreement on
its part to be performed hereunder, (ii) any condition of the Underwriters'
obligations hereunder is not fulfilled, (iii) trading in the Company's Common
Stock shall have been suspended by the Commission or the American Stock Exchange
or trading in securities generally on the Nasdaq Stock Market, New York Stock
Exchange or the American Stock Exchange shall have been suspended, (iv) minimum
or maximum prices for trading shall have been fixed, or maximum ranges for
prices for securities shall have been required, on the Nasdaq National Market,
New York Stock Exchange or the American Stock Exchange, by such Exchange or by
order of the Commission or any other governmental authority having jurisdiction,
(v) a banking moratorium shall have been declared by federal or state
authorities, or (vi) there shall have occurred any attack on, outbreak or
escalation of hostilities or act of terrorism involving the United States, any
declaration by the United States of a national emergency or war, any change in
financial markets, any substantial change or development involving a prospective
substantial change in United States or international political, financial or
economic conditions, or any other calamity or crisis that, in the Underwriters'
judgment, is material and adverse and makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the Securities. Any
such termination shall be without liability of any party to any other party
except that the provisions of Section 4(a)(vii) and Section 6 hereof shall at
all times be effective and shall survive such termination.
(b) If the Underwriters elect to terminate this Agreement as provided
in this Section, the Company shall be notified promptly by the Underwriters by
telephone, confirmed by letter.
10. DEFAULT THE COMPANY. If the Company shall fail at the Closing Date to
sell and deliver the Securities which it is obligated to sell hereunder, then
this Agreement shall terminate without any liability on the part of the
Underwriters or, except as provided in Section 4(a)(vii), any non-defaulting
party. No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect of such default.
22
11. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing and, if to the Underwriters, shall be mailed,
delivered or telecopied to Xxxx Capital Partners LLC, 00 Xxxxxxxxx Xxxxx,
Xxxxxxx Xxxxx, XX 00000, Attn: Xxxxx Xxxxx, Xxxxx-Xxxxxx Capital Group LLC, 000
Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxxxxx
X. Xxxxxxxxxxx; if to the Company, shall be mailed, delivered or telecopied to
it at 00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: A.
Xxxx Xxxx; or in each case to such other address as the person to be notified
may have requested in writing. Any party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers and directors
referred to in Section 6. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Securities from the
Underwriter.
13. ABSENCE OF FIDUCIARY RELATIONSHIP. The Company acknowledges and agrees
that: (a) the Underwriters have been retained solely to act as underwriters in
connection with the sale of the Securities and that no fiduciary or agency
relationship between the Company and the Underwriters has been created in
respect of any of the transactions contemplated by this Agreement, irrespective
of whether the Underwriters have advised or are advising the Company on other
matters; (b) the price and other terms of the Securities set forth in this
Agreement were established by the Company following discussions and arms-length
negotiations with the Underwriters and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the
transactions contemplated by this Agreement; (c) it has been advised that the
Underwriters and their affiliates are engaged in a broad range of transactions
which may involve interests that differ from those of the Company and that the
Underwriters have no obligation to disclose such interest and transactions to
the Company by virtue of any fiduciary, advisory or agency relationship; (d) it
has been advised that the Underwriters are acting, in respect of the
transactions contemplated by this Agreement, solely for the benefit of the
Underwriters, and not on behalf of the Company.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original and all such counterparts
shall together constitute one and the same instrument.
[Signature Page Follows]
23
Please sign and return to the Company the enclosed duplicates
of this letter whereupon this letter will become a binding agreement between the
Company and the Underwriter in accordance with its terms.
Very truly yours,
ACCESS INTEGRATED TECHNOLOGIES, INC.
By /s/ Xxxx X. Xxxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxxx, SVP
Confirmed as of the date first above-
mentioned by the Underwriters.
XXXX CAPITAL PARTNERS LLC
By /s/ Xxxxx Xxxxxxxx
-------------------------
Name: XXXXX XXXXXXXX
Managing Director
Number of Securities Purchased: 2,563,043
XXXXX-XXXXXX CAPITAL GROUP LLC
By /s/ Xxxx Xxxxx
-------------------------
Name: XXXX XXXXX
Managing Partner
Number of Securities Purchased: 2,563,043
24
SCHEDULE I
ISSUER GENERAL FREE WRITING PROSPECTUSES
The Company's Road Show, posted on Netroadshow on March 3, 2006.
25
SCHEDULE II
[FORM OF XXXXXX XXXX & XXXXXX LEGAL OPINION]
26
SCHEDULE III
[ACCESS INTEGRATED TECHNOLOGIES, INC. LIST OF SUBSIDIARIES]
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